Edible Garden AG Incorporated (EDBL) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reveals several concerns: high dependency on retail relationships, elevated costs for expansion, and declining financial metrics, including a gross profit loss and increased SG&A expenses. While there are positive elements such as the USDA Organic herb program and potential growth in CPG products, the lack of specific guidance on CapEx and the need for margin recovery by 2026 raise uncertainties. The Q&A section highlighted management's reluctance to provide detailed financial clarity, further contributing to a negative sentiment.
Key Financial Performance
Q4 2025 Revenue $4.1 million, up from $3.9 million in the prior year period, reflecting strong business performance and new initiatives like the USDA Organic herb program with Kroger and international CPG segment launch.
Q4 2025 Cost of Goods Sold (COGS) $5.3 million, up from $3.8 million in the prior year. The increase was due to onboarding new retail customers during a seasonally compressed period, with expectations for normalization as programs mature.
Q4 2025 Gross Profit Loss of $1.2 million compared to flat in 2024. The loss was attributed to elevated costs for securing 2026 shelf space and deepening retailer relationships.
Q4 2025 Selling, General and Administrative Expenses (SG&A) $4.6 million, up from $2.6 million in the prior year. The increase was driven by depreciation and rent from the NaturalShrimp asset acquisition, higher legal and professional fees, and increased compensation expenses.
Full Year 2025 Revenue $12.8 million, down from $13.9 million in 2024. The decline was due to the strategic exit from floral and lettuce categories, which contributed $1 million in 2024 revenue but had low margins. Core revenue was flat year-over-year.
Full Year 2025 Cost of Goods Sold (COGS) $13 million, up from $11.6 million in 2024. The increase was concentrated in the second half due to onboarding dynamics in Q4.
Full Year 2025 Gross Profit Loss of $0.2 million compared to a gain of $2.3 million in 2024. The decline was attributed to Q4 onboarding costs and is not representative of the ongoing cost structure.
Full Year 2025 SG&A $15.3 million, up from $11.6 million in 2024. The increase was driven by the NaturalShrimp acquisition, capital markets activity, and investments in team and infrastructure.
Stockholders' Equity Improved due to preferred stock issuance associated with the NaturalShrimp acquisition.
Total Debt Declined by approximately $0.6 million year-over-year due to reductions in outstanding notes.
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Operating Highlights
Expansion into Ready-to-Drink (RTD) category: Edible Garden is entering the RTD market, leveraging its Farm-to-Formula approach and sustainable manufacturing infrastructure. The company is developing a state-of-the-art RTD manufacturing initiative at its Midwest facility, partnering with Tetra Pak for proprietary processing capabilities.
New product portfolio: The company is expanding its portfolio with brands like Kick. Sports Nutrition, Jealousy GLP-1, Vitamin Whey, Pickle Party, and Pulp, targeting higher-margin, shelf-stable, and ready-to-drink categories.
Retail expansion: Edible Garden increased its distribution to nearly 6,000 store locations, securing placements with Kroger, Weis Markets, Safeway, The Fresh Market, and Busch's. Additionally, it onboarded Kroger and expanded into 700 more retail locations.
International market entry: The company recorded its first international CPG segment sale of Kick. Sports Nutrition to PriceSmart, marking its entry into international markets.
Cost structure adjustments: The company absorbed elevated costs in Q4 2025 to secure 2026 shelf space and deepen relationships with major retailers like Kroger, Wakefern, and Safeway. This is expected to normalize as programs mature and volumes increase.
Gross margin recovery: Gross margin recovery is a priority for 2026, with plans to scale new programs, reduce third-party procurement costs, and absorb fixed costs over a larger revenue base.
Strategic shift to higher-margin categories: Edible Garden is transitioning from fresh produce to a more diversified consumer packaged goods business, focusing on higher-margin, shelf-stable, and ready-to-drink categories.
Exit from low-margin segments: The company strategically exited the floral and lettuce segments, which contributed $1 million in 2024 revenue but at low margins.
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Risk or Challenges
Cost of Goods Sold Increase: The cost of goods sold in Q4 increased to $5.3 million from $3.8 million in the prior year, driven by onboarding new retail customers during a seasonally compressed period. This elevated cost structure could impact profitability until programs mature and volume increases.
Gross Profit Loss: The company reported a gross profit loss of $1.2 million in Q4 compared to flat in 2024. This was due to elevated costs absorbed to secure 2026 shelf space and deepen relationships with major retailers, which could strain financial performance in the short term.
SG&A Expenses Increase: Selling, general, and administrative expenses rose to $4.6 million in Q4 from $2.6 million in the prior year, driven by depreciation, rent from asset acquisitions, higher legal and professional fees, and increased compensation expenses. This increase includes nonrecurring costs but still reflects a significant financial burden.
Revenue Decline for Full Year: Full-year revenue declined to $12.8 million from $13.9 million in 2024, primarily due to the strategic exit from low-margin floral and lettuce categories. While this aligns with the company's strategy, it highlights the challenge of maintaining revenue growth during transitions.
Gross Margin Decline: Gross profit for the full year was a loss of $0.2 million compared to a gain of $2.3 million in 2024. This decline reflects onboarding costs and other operational challenges, emphasizing the need for margin recovery in 2026.
High Dependency on Retail Relationships: The company's strategy heavily relies on securing and maintaining relationships with major retailers like Kroger, Wakefern, and Safeway. Any disruption in these relationships could significantly impact distribution and revenue.
Elevated Costs for Expansion: The company is investing heavily in expanding its RTD manufacturing capabilities and onboarding new retail customers. While these are strategic moves, they come with high upfront costs that could pressure financial performance in the near term.
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Guidance & Outlook
Expansion into Ready-to-Drink (RTD) Category: The company plans to expand into the RTD category, leveraging its Farm-to-Formula approach, sustainable manufacturing infrastructure, and established retailer relationships. A state-of-the-art RTD manufacturing initiative is being developed at the Midwest facility in partnership with Tetra Pak to meet growing retailer demand at scale. The global RTD market is projected to grow from $842.5 billion in 2025 to $1.26 trillion by 2033, presenting a significant opportunity.
Focus on Higher-Margin Categories: Edible Garden aims to scale its presence in higher-margin RTD and shelf-stable categories while diversifying its consumer packaged goods business beyond fresh produce. This strategy is expected to deliver more predictable and scalable results.
Retail Expansion and Distribution: The company has expanded its distribution to nearly 6,000 store locations and plans to deepen existing relationships while broadening its reach into new markets. Incremental distribution of over 700 additional retail locations was achieved in Q4 2025.
Product Portfolio Growth: Edible Garden is expanding its portfolio of better-for-you brands, including Kick. Sports Nutrition, Jealousy GLP-1, Vitamin Whey, Pickle Party, and Pulp. These products are being distributed across domestic e-commerce and international markets, including Amazon, PriceSmart, Target.com, and Walmart.com.
Gross Margin Recovery: The company prioritizes gross margin recovery in 2026 by scaling new programs, reducing third-party procurement costs, and absorbing fixed costs over a larger revenue base.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How should we view the margin from fresh to CPG products, and what is the revenue expectation and breakdown for CPG versus fresh through 2026?
A:Management expects more robust and stable margins for RTD and CPG products compared to fresh products due to their shelf-stable nature, which reduces shrink issues. Fresh products have been instrumental in building relationships with major retailers like Walmart and Meijer. Revenue from CPG is expected to be significant, driven by market demand and retailer trust. Margins for CPG are expected to be in the low double digits to mid-teens, while RTD products could achieve margins in the 20%-30% range.
Q:Where specifically do you expect to put out your RTD products, and will they be produced at the Midwest facility?
A:The RTD products will primarily target the protein segment, including sports and performance nutrition. The Midwest facility will produce these products, with plans to sell out the plant within 90 days and reach hundreds of millions of units in capacity within a few years. The facility will handle private label production for major retailers and Edible Garden's own brands, such as Kick and Jealousy.
Q:What are the CapEx requirements, build-out timeline, and total scale for the Midwest facility?
A:Management did not provide specific numbers for CapEx requirements but mentioned significant investment in machines and retrofitting a building. They are working with local and state authorities for incentives and aim to have the facility operational by the tail end of 2027.
Q:How sustainable is the growth momentum, including new retail placements and expansion to nearly 6,000 locations?
A:Management believes the growth momentum is sustainable due to increased focus on core products, strong customer relationships, and trends like healthier eating and home cooking. They expect continued store count growth across all product categories, including herbs, pickles, and RTDs, with opportunities in new markets like convenience stores.
Q:Review of Unclear Management Responses
A:Management avoided providing specific CapEx numbers for the Midwest facility, citing the scale of the opportunity and competitive considerations. Their response lacked detailed financial clarity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Amazon PriceSmart
Busch distribution
CPG category
Chairman afternoon
Communications word
Edible Garden
Enable Garden
Farm Formula
Formula approach
Full Conference
Full Update
GLP category
Garden AG
Garden Founder
Garden Full
Garden Interim
Garden ability
Kroger
Officer Edible
RTD category
Safeway
brand portfolio
capability
consumer good
core
customer
environment agriculture
infrastructure
manufacturing
onboarding
portfolio brand
processing
produce
scale
store location
strength
EDBL Transcript
Edible Garden AG Incorporated (EDBL) Q4 2025 Earnings Call Transcript
Unknown3-31
The earnings call reveals several concerns: high dependency on retail relationships, elevated costs for expansion, and declining financial metrics, including a gross profit loss and increased SG&A expenses. While there are positive elements such as the USDA Organic herb program and potential growth in CPG products, the lack of specific guidance on CapEx and the need for margin recovery by 2026 raise uncertainties. The Q&A section highlighted management's reluctance to provide detailed financial clarity, further contributing to a negative sentiment.
Edible Garden AG Incorporated (EDBL) Q3 2025 Earnings Call Transcript
Unknown11-14
Despite revenue growth and strategic expansion plans, the company faces significant challenges: declining gross profit, increased operating expenses, and a widening net loss. The cash position has deteriorated, raising liquidity concerns. While there are positive strategic initiatives, such as the NaturalShrimp facility and retailer partnerships, the lack of detailed guidance and the negative financial metrics overshadow these efforts. The Q&A session highlighted management's vague responses, further contributing to uncertainty. Given these factors, the stock price is likely to experience a negative reaction in the short term.
Edible Garden AG Incorporated (EDBL) Q2 2025 Earnings Call Transcript
Unknown8-14
The earnings call presents a mixed picture: while there are strategic realignments and positive developments like the NaturalShrimp acquisition and high-margin product focus, financials reflect declining revenue and increased losses. The Q&A reveals growth in private labels and optimism about new product lines, but management's vague responses on specifics raise concerns. The company's dependency on new revenue streams and margin pressures add uncertainty. Considering these factors, the stock price is likely to remain stable, hence a neutral sentiment.
Edible Garden AG Incorporated (NASDAQ:EDBL) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call presents a mixed outlook: while there are improvements in gross margin and a focus on higher-margin products, revenue decline and competitive pressures remain concerns. The Q&A highlights potential growth in new product lines and strategic acquisitions, but lacks clarity on financial impacts. The absence of shareholder return plans and the risks associated with acquisitions and regulatory compliance temper optimism. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
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